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Two former directors of Tesco have been cleared over accusations that they manipulated figures, resulting in the firm's profits being overstated by more than £250 million.
Chris Bush, the former UK manager of Tesco, and John Scouler, who previously held the position of UK food commercial director with the supermarket chain, were acquitted after judge Sir John Royce dismissed the case for being ‘so weak’ that it should not go before a jury.
A retrial is still being considered for a third former director, Carl Rogberg, who is facing the same charges.
In August 2014, Tesco announced that profits for the first half of that year were expected to be around £1.1 billion. However, in September 2014 and operating under the leadership of new chief executive Dave Lewis, the firm made a public announcement to the stock market that profits had been overstated by approximately £250 million. This revelation had a catastrophic effect on the supermarket, with shares plummeting by 12% and £2 billion being wiped off the company's share value. Subsequent investigations revealed that income had been exaggerated by £284 million.
The jury at Southwark crown court heard that the alleged offences took place at a time when Tesco was facing increased competition from budget supermarket chains such as Aldi and Lidl. The result was that profits had reduced substantially along with Tesco's share of the market.
Sasha Wass, QC appearing for the prosecution described Mr Bush and Mr Scouler as "generals" who put pressure on "foot-soldiers" working below them to falsify figures so that Tesco's finances appeared better than they were. This was done by wrongly including income in financial records to ensure that targets were met, and by delaying charging costs.
Sir John Roye concluded that although fraudulent activity most definitely took place, he felt that:
“One of the major issues has been whether the prosecution could prove the defendants were party to that. The drive to achieve targets came from the very top, from Philip Clarke.”
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